This proposal is designed to enhance public understanding of the financial position of psychiatric hospitals and to improve the ability of researchers and policy makers to compare the effects of alternative methods for reimbursing mental health care on profits. In recent years, researchers have paid substantial attention to the income and operating expenses of general acute-care hospitals. Little attention has been devoted to the finances of psychiatric hospitals as illustrated by the fact that the psychiatric sections of the Hospital Literature Index list only 12 articles on hospital finance from first quarter 1980 to first quarter 1989. The proposed study builds a pooled time-series/cross-section data base using the Medicare Cost Reports received by the Health Care Financing Administration (HCFA). Supplementary data are added on case mix, location, competitive conditions, and chain affiliation, and measures of financial structure and stability are derived. The investigators will study the dispersion of profits and their stability over time, as well as the relationship between financial structure and stability are derived. The investigators will study the dispersion of profits and their stability over time, as well as the relationship between financial structure and profitability. Least squares regression models are developed to predict hospital profitability and classify hospitals in the data base. This proposal creates a national longitudinal data base on psychiatric hospital finances, a set of careful analyses of changes in hospital profit levels over time, and a framework for assessing the level of psychiatric hospital profits. Specifically, the following outputs are anticipated: (1) Baseline data for nonprofit and for-profit 1982-1987, (2) An analysis of the sources and key characteristics of profitable nonprofit and for- profit hospitals, and an analysis of how the characteristics of the two types of institutions differ. (3) An evaluation of how psychiatric hospitals fared in the period when important changes in hospital reimbursement took place. (The period under study encompasses the period of phase-in of DRGs for general hospitals and of TEGRA defined reimbursement for psychiatric facilities.) (4) A predictive model used both to classify individual hospitals and to predict how changes in policy affects profit level.